Natural resources investor Matt Badiali says that now is the time to put your money into wheat. This year almost 273 million tons of wheat was harvested which is an all-time record. When an investor in natural resources hears “all-time record” that means they want to steer well clear of that commodity. When a market has been well-supplied by a commodity the prices are much more likely to go down than up due to the simple law of supply and demand. Investor Matt Badiali, who writes about natural resource investing for Banyan Hill Publishing, says that the situation with wheat isn’t as straightforward as it appears, though. He says markets continue to tighten even though more is being harvested than ever before.
About half of all wheat is shipped to China. China, which has an enormous population of 1.4 billion people, is stockpiling wheat. The reason why is that doing so gives them the food security. The Chinese government has said that they plan on continuing to increase the supply of wheat in their country. Western nations are also seeing more demand for wheat. Due to these factors, wheat supply is the tightest it has been since 2007. Back then wheat was priced at $5 per bushel, pretty close to the $5.08 per bushel it is right now. In 2008 a bushel of wheat shot up to $11.60, or more than a 100 percent gain.
The reason why is that investors started to fear a supply shortage, Matt Badiali said. He says a very similar situation is once again occurring this time around. Australia, Argentina, and Eastern Europe are all major suppliers of wheat. They also all experience poor growing conditions this year which reduced how much they could grow. He said that wheat has rallied three times this year, each time ending higher. The recent pullback in the price of wheat makes now an excellent time for investors to jump in. Matt Badiali says he sees wheat going up to $6 a bushel sometime in the next few weeks. He expects another rally at the end of the year where the price will go even higher. He recommends investors look at Teucrium Wheat ETF (NYSE: WEAT) in order to take advantage.